Navy awards $261.9M to Lockheed Martin for Trident Fleet Support, a sole-source engineering services contract

Contract Overview

Contract Amount: $261,934,283 ($261.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-10-01

End Date: 2028-09-29

Contract Duration: 1,459 days

Daily Burn Rate: $179.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: FY25 UK TRIDENT FLEET SUPPORT

Place of Performance

Location: UNIONDALE, NASSAU County, NEW YORK, 11553

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $261.9 million to LOCKHEED MARTIN CORPORATION for work described as: FY25 UK TRIDENT FLEET SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Engineering services are critical for maintaining the strategic Trident II D5 missile fleet. 3. Long-term contract duration (4 years) suggests a need for sustained support. 4. Cost-plus incentive fee structure aims to align contractor performance with government objectives. 5. The contract is a definitive contract, indicating a firm commitment. 6. No small business set-aside, suggesting large prime contractor involvement.

Value Assessment

Rating: fair

The contract value of $261.9 million over four years for engineering services related to the Trident II D5 missile fleet is substantial. Benchmarking this specific type of strategic defense support is challenging due to its unique nature and limited market. However, the sole-source award and cost-plus incentive fee structure warrant careful scrutiny to ensure value for money is achieved, as competition is absent and costs can escalate if not managed effectively. The contractor, Lockheed Martin, is a primary defense contractor with extensive experience in this domain.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source can provide the required services, often due to specialized knowledge, proprietary technology, or existing infrastructure. The lack of competition means there was no opportunity for multiple bidders to offer proposals, which can limit price discovery and potentially lead to higher costs compared to a fully competed contract.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. The government relies on strong negotiation and oversight to ensure a fair price is paid.

Public Impact

The U.S. Navy benefits from continued engineering support for its critical Trident II D5 missile fleet. This contract ensures the operational readiness and sustainment of a key strategic asset. The primary beneficiary is the Department of Defense's strategic deterrence capability. Work is likely to be performed in New York, where Lockheed Martin has significant operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus incentive fee contracts can lead to cost overruns if not closely monitored.
Long-term nature of the contract may reduce flexibility for future adjustments.
Dependence on a single contractor for critical strategic asset support.

Positive Signals

Award to a prime defense contractor with proven experience in strategic systems.
Incentive fee structure aims to reward performance and cost control.
Contract duration provides stability for essential fleet support services.
Engineering services are crucial for maintaining the safety and effectiveness of the Trident II D5 missile system.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting the defense industry's strategic missile systems. The market for such specialized engineering and sustainment services for nuclear deterrents is highly concentrated, with a few large, experienced defense contractors dominating. The value of this contract is significant within its niche, reflecting the complexity and criticality of the Trident II D5 program. Comparable spending benchmarks are difficult to establish due to the unique nature of strategic weapons system support.

Small Business Impact

This contract does not appear to have a small business set-aside, and the prime contractor is Lockheed Martin Corporation, a large defense company. This suggests that small businesses are unlikely to be directly involved as prime contractors. However, Lockheed Martin may utilize small businesses as subcontractors, contributing to the small business ecosystem indirectly. The extent of small business subcontracting will depend on Lockheed Martin's procurement practices and any specific subcontracting goals outlined in the contract.

Oversight & Accountability

Oversight for this contract will be primarily managed by the Department of the Navy, likely through contracting officers and program managers. Accountability measures will be embedded within the Cost Plus Incentive Fee (CPIF) structure, which ties contractor profit to performance metrics and cost targets. Transparency may be limited due to the sensitive nature of the strategic systems involved, but contract awards and basic details are publicly available. The Inspector General for the Department of Defense may have jurisdiction for audits and investigations.

Related Government Programs

Trident II D5 Missile Support
Strategic Weapons Systems Sustainment
Naval Nuclear Propulsion Program
Defense Engineering Services
Missile Defense Agency Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Critical defense system support

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $261.9 million to LOCKHEED MARTIN CORPORATION. FY25 UK TRIDENT FLEET SUPPORT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $261.9 million.

What is the period of performance?

Start: 2024-10-01. End: 2028-09-29.

What is Lockheed Martin Corporation's track record with the Trident II D5 missile program and similar strategic defense contracts?

Lockheed Martin Corporation has a long-standing and extensive track record with the Trident II D5 missile program, serving as the prime contractor for many years. They are responsible for the development, production, and sustainment of the missile itself. Their experience extends to other major strategic defense systems, including intercontinental ballistic missiles (ICBMs) and other naval strategic weapons. This deep historical involvement provides them with unique institutional knowledge and technical expertise, making them a logical choice for continued support. Their performance on previous contracts has generally been viewed as meeting requirements, though like many large defense programs, it has also faced scrutiny regarding cost and schedule.

How does the pricing structure (Cost Plus Incentive Fee) compare to other contract types for similar defense engineering services, and what are the implications for value?

Cost Plus Incentive Fee (CPIF) contracts are common for complex defense programs where the final cost is uncertain, but performance targets can be defined. Unlike fixed-price contracts, CPIF allows for costs to be reimbursed plus a fee that is adjusted based on performance against targets (e.g., cost, schedule, technical). Compared to Cost Plus Fixed Fee (CPFF), CPIF offers a stronger incentive for the contractor to control costs and meet performance goals, as the fee can increase or decrease. However, compared to firm-fixed-price contracts, CPIF still carries higher cost risk for the government, as cost overruns are shared. The value is realized if the incentives effectively drive superior performance and cost efficiency, but requires robust government oversight to prevent contractor complacency or gaming of the incentive structure.

What are the primary risks associated with a sole-source award for critical defense systems like the Trident II D5 fleet support?

The primary risk associated with a sole-source award for critical defense systems is the lack of competitive pressure, which can lead to inflated pricing and reduced innovation. Without competing bids, the government has less leverage to negotiate the best possible price. There's also a risk of vendor lock-in, where the government becomes overly dependent on a single supplier, potentially limiting future options or increasing switching costs. Furthermore, a sole-source award can reduce transparency and make it harder to benchmark costs against market alternatives. For critical systems, this dependence also poses a supply chain risk if the sole provider experiences operational issues or financial instability.

What are the historical spending patterns for Trident II D5 fleet support, and how does this $261.9M award fit within that context?

Historical spending on the Trident II D5 missile program, including sustainment and engineering support, has been substantial and consistent over decades, reflecting its status as a cornerstone of U.S. strategic deterrence. Annual expenditures can fluctuate based on modernization efforts, depot maintenance cycles, and specific fleet readiness requirements. While precise year-over-year comparisons for this specific 'fleet support' category are not readily available in the public domain without deeper analysis of specific contract line items, a contract of this magnitude ($261.9M over four years, averaging over $65M annually) is indicative of the ongoing, significant investment required to maintain such a complex and vital strategic asset. It aligns with the expected long-term, high-value nature of supporting a strategic nuclear deterrent.

What are the potential performance challenges or concerns for Lockheed Martin in executing this four-year engineering services contract?

Potential performance challenges for Lockheed Martin in executing this contract include maintaining the highly specialized workforce required for strategic missile systems, especially given potential retirements and competition for skilled engineers. Ensuring consistent quality and adherence to stringent safety and security protocols in a sole-source environment is critical. Managing the cost-plus incentive fee structure effectively to avoid cost overruns while meeting all performance metrics requires diligent program management. Furthermore, adapting to any evolving technological requirements or geopolitical shifts that might impact the Trident II D5's operational needs over the four-year period presents an ongoing challenge. Supply chain disruptions for specialized components could also pose a risk.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003024R6045

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 55 CHARLES LINDBERGH BLVD, UNIONDALE, NY, 11553

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $1,163,556,758

Exercised Options: $353,924,745

Current Obligation: $261,934,283

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $22,639,485

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline